Consumer Law
Klaus Viitanen
University of Helsinki
October-November 2012
The main aims of these lectures
1) to give an overall picture on different legal
instruments used in consumer law, especially in EU
consumer law and in the Nordic countries
2) a special attention will be given on the problems
connected with consumer´s access to justice
1.1. Basic definitions:
Consumer law
the class of norms which are especially designated to protect
the consumer in his or her dealings with a trader (direct
Competition Law and Unfair Competition rules give only
indirect protection to consumers
a natural person who is acquiring goods or services for an
other use than business purposes
a new trend: from consumer protection to a more wider user or
client protection (.e.g. passenger protection in air, railway, sea
and road transport contracts)
a natural or legal person who is professionally selling goods or
providing services to consumers in order to obtain economic
Substantive Consumer Law
rules of consumer legislation which define the
rights and obligations of consumers and traders
Consumers' Access to Justice
different methods (often supervisory authorities and dispute
settlement bodies) which aim is to ensure that consumers'
rights are fulfilled also in practice
Access to justice –questions are in close relation to
substantive consumer law
without effective means for enforcement and consumer
redress, the material improvements in consumer protection
legislation will have little or no influence at all in a
consumer's daily life
formal right to take a legal action in a court is not enough
Consumer Law -questions may be roughly
divided into two groups:
1)protection of consumers' collective interests
interests where no individual consumer has a right to remedy
when an infringement of these interests occurs
regulation and supervision of marketing
regulation and supervision of product safety
2)protection of individual rights
how consumer's rights are fulfilled in individual cases after a
contract has been concluded and a consumer is dissatisfied
with his purchase
contractual remedies when a product or service is
product liability
1.2. EU Consumer Law
The legal basis and the main aims of EU Consumer
Law in The Treaty on the Functioning of The European
Union (former EC Treaty, originally Treaty of Rome):
1)Internal Market -argument
EU is entitled to adopt measures which have as their object the
establishment and functioning of the internal market (art. 114)
aim is to abolish obstacles of free movement of goods and
2)Consumer Protection -argument
in order to ensure a high level of consumer protection (art. 169)
Is there are a conflict between these two aims?
in theory no, but how about in practice!
The Consumer Images behind Consumer Law
The EU Consumer Law:
a consumer is an active and critical information-seeker, who is
able to make rational choices on the basis of collected
information (a rational consumer)
the main stress in the legal regulation is in the regulation of
information: to ensure the accessibility and quality of
The Nordic Consumer Law:
a passive consumer, who is neither able to collect information
available nor to use it in order to make a rational choice (an
irrational consumer)
regulation of information is not enough to ensure rational
there is also a need for effective protection of consumers´
individual rights, e.g. by means of contract law
Legal Instruments in EU Consumer Law
a traditional instrument in EU consumer law
have to be implemented to the national legislation
minimum directives
set only the minimum level of protection
MSs are free to provide better protection in their own
maximum directives
sets also the maximum level of protection
MSs are not entitled to provide better or weaker protection
are directly applicable in all MSs
there is no need to implement them to the national legislation
are becoming more popular in EU consumer law
The EU Consumer Law directives and
Regulation of Marketing
Misleading and Comparative Advertising Directive (1984,
amended 1997, a codified version 2006/114/EC, OJ L 376,
Unfair Commercial Practices Directive (2005/29/EC, OJ L 149,
Consumer Information and Contract Law
Doorstep Selling Directive (85/577/EEC, OJ L 372, 31.12.1985)
Package Travel Directive (90/314/EEC, OJ L 158, 23.6.1990)
Distance Selling Directive (97/7/EC, OJ L 144, 4.6.1997)
Distance Marketing of Financial Services Directive (2002/65/EC,
OJ L 271, 9.10.2002)
Consumer Credit Directive (2008/48/EC, OJ L 133, 22.5.2008)
Timeshare Directive (2008/122/EC, OJ L 33, 3.2.2009)
Consumer Rights Directive (2011/83/EU, OJ L 306, 22.11.2011)
Contract Law
Unfair Contract Terms Directive (93/13/EEC, OJ L 95, 21.4.1993)
Sale of Consumer Goods Directive(99/44/EC,OJ L 171, 7.7.1999)
Regulations on passenger´s rights in transport contracts:
Regulation on Air Passenger s´Rights on Denied Boarding and on
Cancelled or Delayed Flights (EC N:o 261/2004, OJ L 46, 17.2.2004)
Regulation on Rail Passengers` Rights and Obligations (EC N:o
1371/2007, OJ L 315, 3.12.2007)
Regulation on Passengers` Rights on Bus Transport (EU N:o
181/2011, OJ L 55, 28.2.2011)
Regulation on Passengers` Rights on Maritime Transport (EU N:o
1177/2010, OJ L 334, 17.12.2010)
Safety of Products
Product Liability Directive (85/374/EEC, OJ L 210, 7.8.1985)
Product Safety Directive (01/95/EC, OJ L 11, 15.1.2002)
Access to Justice
Injunctions Directive (98/27/EC, OJ L 166, 11.6.1998)
Cooperation Regulation (EC N:o 2006/2004, OJ L 364, 9.12.2004)
New Trend: Towards full harmonisation
The starting point: minimum directives
most consumer law directives between years 1985-2002 were
minimum directives
there were only few exception, e.g., the product liability
directive from 1985
The new trend from year 2005: maximum directives
Unfair Commercial Practices Directive 2005/29/EC
Timeshare Directive 2008/122/EC
Consumer Credit Directive 2008/48/EC
Consumer Rights Directive 2011/83/EU
The key questions:
1)whose interests does full harmonisation promote?
2)is full harmonisation in practice possible?
Who needs full harmonisation?
Official explanations:
1) full harmonisation promotes consumers´ confidence
on internal market
 assessment of this argument: do consumers really
need exactly same rules in all MSs?
1)most sale of consumer goods takes still place inside MSs,
cross-border shopping forms still only a small minority of the
total sale
2)when cross-border shopping takes place, a certain minimum
level of protection (e.g. at least two weeks cooling off -period
in distance selling) is usually totally enough for consumers
3)instead more emphasis should be focus on the settlement of
cross-border consumer disputes, where there are many
in practice many consumers avoid cross-border shopping due to
the difficulties in potential disputes with traders domiciled in other
2)full harmonisation promotes traders´ willingness to
cross-border marketing and sale
assessment of this argument:
are the differences in consumer law rules, e.g., concerning
marketing or consumer contracts, in practice so relevant in
cross-border marketing and sale compared to, e.g., rules on
product design, content, package, or labelling
if there are markets for a product, and a company has
capacity for cross-border marketing, are the differences in
marketing and contract rules really in practice any relevant
obstacles to make business?
compare to the situation in United States!
2.1. General
Domestic Marketing (ch. 2 of these lectures)
marketing in which traders and consumers are domiciled in a
same country
Cross-border Marketing (ch. 3 of these lectures)
marketing in which traders and consumers are domiciled in
different countries
The regulation of marketing has usually two main aims
1)prohibition of unfair marketing practices
to prohibit unfair marketing practices, especially false and
misleading advertising
2)disclosure of consumer information
to ensure that traders provide to consumers certain basic
information during the marketing
Prohibition of unfair marketing practices
Different techniques to regulate:
1)general clauses
prohibits the use of all kinds of unfair marketing practices
without clearly defining what marketing practices are unfair
whether a marketing practice is unfair or not, is decided by
it is question of delegation of legislative power from the
Parliament to courts
a general clause is a flexible way to regulate, especially when
new unfair marketing practices have been developed (e.g.
marketing in internet)
whether the system is predictable, depends on the amount
of case law and its accessibility in practice
2)specific detail rules
marketing practices which are regarded as illegal are defined
by specific rules in legislation
benefit: detail rules make it for an advertiser easier to predict
what kind of marketing practices may be regarded as illegal
defect: in case there is a need to interfere with a totally new
kind of marketing practice, legislative changes have to be done
3)combination of general clause and specific rules
by using this model, benefits of general clause and specific
rules may be achieved at the same time
in the Nordic countries the combination of general clauses and
more detail rules have traditionally been used in the regulation
of unfair marketing practices
however, in the Nordic countries the main focus has always
been in the use of general clauses
due to this, most principles on unfair marketing practices in the
Nordic countries may be found in the case law instead of the
written law
Duty to Disclose Consumer Information
Detail regulation
defines quite precisely what information a trader is obliged to
give to consumers during the marketing
is much more effective than general clauses
is used in several EU consumer law directives: they oblige
MSs to adopt rules which set to traders duties to give certain,
specific information to consumers concerning:
1) cooling-off period
consumers are not able to use this right, if they are not aware
of its existence
see, e.g., Timeshare Directive, art. 5.4.
2)other essential information, for example
a) Package Travel Directive, art. 3.2. and 4.1.
the identity of the trader (name, address, etc.)
the legal rights of consumers
the main features of the product or service marketed
all relevant information connected to the price of the product or
service (including taxes, extra expenses, etc.)
b) Consumer Credit Directive, art. 4
the annual percentage rate (the total cost of credit to a consumer
per an year)
2.2.Unfair Commercial Practices Directive
replaced Misleading and Comparative Advertising Directive
84/450/EEC in consumer matters, but not in unfair
competition matters (a codified version in year 2006)
but how is comparative advertising regulated at this
on the contrary to the most earlier consumer law directives,
UCPD is a full harmonisation directive
taste and decency –questions
e.g. discriminatory (sex, ethnic background, religion)
advertising has been left outside of the scope of the
directive (recital 7)
is based on a combination model
general clause (art. 5)
more specific rules (art. 6-9)
black list of always forbidden practices (Annex I)
General clause (art.5)on unfair commercial practices
commercial practice, which
a)is contrary to the requirements of professional
diligence (fairness test, e.g. false or misleading
b)it essentially distorts or is likely to distort the economic
behaviour of the average consumer (effect test),
is regarded as unfair (art. 5.2)
protection of vulnerable consumers
commercial practices which are directed to a clearly
identifiable group of particular consumers (e.g. children,
sick or elderly people) are assessed from the perspective of
the average member of that group (art. 5.3.)
Supplementary specific rules:
Misleading commercial practices (art.6-7):
A commercial practice shall be regarded misleading if
a) it contains false information and is therefore
b) it misleads or is likely to mislead the average
consumer even if the information is factually correct
c) it omits certain relevant information that the average
consumer needs
in all three alternatives this practice causes or is likely to cause
a consumer to take an economic decision that he would not have
taken otherwise
Aggressive commercial practices (art.8-9):
A commercial practice shall be regarded as aggressive
a) it by harassment, coercion, including the use of
physical force, or undue influence
b) significantly impairs or is likely to significantly impair the
average consumer´s freedom of choice and thereby
c) causes or is likely to cause him to take economic
decision that he would not have taken otherwise
The flexible nature of the general clause
the specific rules in art. 6-9 on misleading or aggressive
commercial practices clarify, what practices may especially be
regarded as unfair
the general clause may be used in cases
1)which fall under the scope of the specific rules,
but also in cases
2)which do not fall under the scope of art. 6-9
The black list
annex I of the directive contains a list of commercial practices
which are in all circumstances unfair, so called typically unfair
practices (fairness or effect test is not needed)
Supervision of marketing
should be organised in the MSs as during the former
Misleading and Comparative Advertising Directive: state
authorities or consumer organisations are entitled to start court
or administrative procedure (art.11)
Problematic questions in the UCPD
1)what is the expected level of knowledge of
average consumers?
the case law of the ECJ: average consumer is a reasonable
well-informed and reasonable observant and circumspect
a clear conflict between the common meaning of word average
and this definition: an average consumer is certainly not
reasonable well-informed and observant
implementation in the Nordic countries:
the main stress has been given to the common meaning of
word “average” and the word average itself has been left
away from the law text
remember the different consumer images in EU and Nordic
consumer law (an active information-seeker v. a passive ,
irrational consumer)
this implementation may cause different interpretations in
MSs, as many MSs adopted also the word average to their
law text
2)when the condition ”is likely to essentially distort the
economic behaviour of consumers” is met?
different wording is used in articles 6-9: “is likely to cause him
to take an economic decision that he would not have taken
different wording – different meaning?
the latter definition seems to require more stronger effect to
the behaviour of consumers
should we assess the effect of, e.g., false information
separately, when it is hardly never decisive from the
viewpoint of consumer´s decision-making procedure
(separate effect)
together with all other marketing information which effects
on consumers (common effect)
the choice between these two alternatives might have
serious consequences
• example: claims on environmental friendliness of
marketed products
3)the effect of the taste and decency –doctrine
matters related to taste and decency were left outside of the
scope of the directive (recital 7)
these differ greatly among European countries, e.g.,
concerning discriminatory (sex, ethnic background, religion)
sometimes these values are overlapping with the protection the
economic interests of consumers (which is the main target of
the directive)
example: marketing to minors in schools
protection of economic interests: minors do not expect to
face marketing at schools, especially marketing in which
teachers are involved
social values: schools should be marketing-free zones in a
world which is coming more and more commercial
2.3. Regulation of Marketing in Finland
I. Former regulation
relevant act: Consumer Protection Act 1978, ch. 2
the former general clause in the Finnish Consumer Protection
Act, ch. 2, art. 1:
“Conduct that is contrary to good practice or that is
otherwise unfair from the viewpoint of consumers is not
allowed in marketing”
specific articles, e.g., ch. 2, art. 2:
”False or misleading information shall not be conveyed in
whether marketing had impact on the economic behaviour of
consumers in the target group, was not relevant from the
viewpoint of law text
but was it an implied term which fulfillment was necessary
before these rules could be applied?
II. Implementation of the UCPD in Finland
amendments to chapter 2 of the CPA (561/2008) entered into
force on 1 October 2008
a new general clause (ch.2, art. 1)
”Marketing which
(a)is contrary to good practice or
(b)is unfair from the viewpoint of consumers,
is not allowed in marketing”
new separate general clauses on
1) marketing contrary to good practice (ch.2, art. 2)
based on the taste and decency –restriction
2) unfair marketing practices (ch.2, art. 3)
based on the idea to prevent the distortion of consumers´
economic behaviour
in addition, (3) the CPA contains new and old specific rules on
unfair marketing practices
1) Marketing contrary to good practice
a new general clause (ch.2, art 2):
” in clear conflict with generally accepted social values,
especially if
a)it infringes human rights or religious or political
b)it contains discrimination on the basis of sex, age,
ethical or geographical origin, etc.
c)it shows in a positive light activities where health,
general safety or environment are put in danger”
former Finnish case law on the protection of social values in
marketing was based only on the interpretation of the general
clause on the consequence that the competence of Consumer
Ombudsman and Market Court was sometimes questioned
the implementation of UCPD solved this problem and there is
now a clear legal basis: CPA ch. 2, art. 2
Some examples from the former case law (still valid!)
a) violence in marketing
Market Court decision 1998:18
The Raisio Group was forbidden from showing a TV
commercial called Gone with the Winchester, where a soldier
was shot in the back. According to the Court, violence is not an
acceptable way of attracting attention in advertising, especially
when violence has no connection with the product being
advertised (in this case food stuff).
b)discrimination based on sex
Market Court decision 2001:6 (Lola –case)
Maskun Kalustetalo Oy was marketing sofas by using ex-Miss
Finland who was lying in one of sofas dressed with her bikinis
only. The advertisement contained, e.g. following text: ”Lola is
not included in the price!”The court stated, that the use of halfnaked woman in an advertisement may, as such, not be
regarded as unfair. However, the ad may be considered as
insulting due to a way how woman is treated in it. In this case
the campaign was regarded as discriminative and unfair.
2) Unfair marketing practices
a new general clause (ch. 2, art. 3), which scope of application
covers also the specific rules (ch. 2, art. 4-14)
the general clause is rather identical to art. 5 of the UCPD:
according to ch.2 art 3: unfair marketing is marketing, which is
contrary to the requirements of professional diligence and
is likely to distort the economic behaviour of consumers
who belong to its target group
one relevant difference: average consumer is not mentioned at
according to Government´s Proposal (HE 32/2008), the
concept of average consumer is equivalent to the concept
of ordinary consumer on the consequence that there is no
need to mention it in the law text
similar choice has been made also in the other Nordic
effects from the viewpoint of full harmonisation?
Protection of vulnerable consumers
UCPD: a special attention should be given to the target group
in the assessment of legality of a marketing campaign
CPA contains now in its general clause a clear provision on the
protection of vulnerable consumers (minors, elderly people etc)
the protection of vulnerable consumers was in the Nordic
countries possible also before the law reform, but it was based
on case law only
marketing aimed at minors provides here a good example
main principle: marketing to minors is in principle allowed, but
it must comply with much more stricter rules than marketing to
Market Court 2000:12: Distribution of advertising magazine in
schools and day-care centres
Family 2000 -magazine was a publication intended for
children and young people which contained marketing
mainly in the form of articles. The Market Court banned the
distribution of the magazine in schools and day-care
centres without parents' permission
3) Specific rules in ch. 2 of the CPA
Identification of marketing (ch.2., art.4)
consumers should always be able to make difference between
commercial and non-commercial material and to identify the
person behind marketing
this rule it is not based on the UCPD, but was initially created in
case law already in 1980´s, and was added to CPA in year 2002
Market Court decision 1997:6: Commercials must be
distinct from programming
Kiss FM radio station was forbidden from broadcasting commercials unless they are distinguished from other programming by, for example, a distinctive tune used both before
and after commercial breaks.
Misleading or false marketing (ch.2., art. 6-7)
prohibition to give
a)misleading information
b)false information
b)omit relevant information
which is likely to cause a consumer to take a transactional
decision that he would not have taken otherwise
rather identical to art. 6-7 of the UCPD
once again, the concept of the average consumer is not at all
mentioned in the law text
Duty to disclose information (ch.2, art.8)
corresponds article 7.4. of the UCPD
marketing of individualized products or services should always
contain at least the following information:
1) the main features of a product and service
in a scale which is appropriate (a)when taking into account
the marketed product or service and (b)the used marketing
• different requirements for TV and newspaper adds!
2) trader´s – or his agent´s - name and geographical address
3) price information: the total price of the product or service
including all taxes
this is based also on the former case law and Decree on
Price Marking
the price had to be mentioned in an advertisement where
a certain product or service could be identified
the price mentioned had to be the total price, included all
taxes and service charges
the most important information for a consumer is normally the
total price of the product or service
it does not matter, whether the procedure to count the total
price would in practice be rather easy, the price informed to
consumers in marketing has to be always the total price
Market Court decision 1992:11: Price splitting
in advertising of cruise prices
Oy Viking Line Ab had marketed its cruise prices without
mentioning the passenger tax. The Court stated, that passenger
tax is a part of the price which consumers must pay for a
cruise. From the viewpoint of the consumer it makes no
difference that the business which sells the cruise forwards
part of the price to the state in the form of tax. It is important for
consumers that ads clearly indicate the total price charged by
the business. Marketing, which do not contain the total price of
the product or service is regarded as unfair.
Additional benefits (ch.2, art.12) and benefits based on
chance (lotteries etc.) (ch.2, art. 13-14)
are accepted in marketing only if the following two conditions
are fulfilled:
1) benefits should not have a dominant role in the marketing
this condition is based on the general clause, not on the
specific rules above
2) the means of getting additional benefits should be clearly
explained in the marketing
3) a former requirement until year 2011: consumers´ right to
take part on lottery or in other kind of competition could not be
connected to the fact whether he was purchasing a product or
change in June 2011: purchase may now be put as a
condition to participate
reform was argued on basis of ECJ recent case (C-304/08)
but was the case misunderstood in Finland?
Market Court decision 1995:25: Free gifts and lotteries
in the direct marketing of time-shares
Helsingin Resort Marketing Oy was direct marketing of
timeshares by inviting consumers to a special meeting. The
predominant focus of an invitation letter sent out by the
company to a presentation and sales meeting was on free gifts
and lotteries. Based on this information, consumers had
difficulty in assessing the true nature of the meeting in
question. Many of the consumers arriving at the meeting did so
mainly to collect the free gift promised. The marketing was
regarded to be in conflict with the general clause because the
promised benefits had a dominant position in the marketing.
Other specific norms in ch.2 of the CPA:
comparative or other marketing may not cause confusion
between products of different traders (art.5)
the former article concerning comparative advertising was
removed to Unfair Competition Act
what is the role of this removed article in consumer
prohibition to use aggressive selling methods (art. 9)
prohibition of inertia selling (art. 10)
it is prohibited to deliver a products or a service without an
express order in case a consumer is expected to pay it in
case he does not clearly refuse or return the good
the price should not be announced as being reduced more than
it actually has been (art. 11)
the promised discount should always be real
2.4. Case Law
many leading principles of the Finnish marketing law have
been created by the Market Court since 1978 in cases where the
former general clause was applied
during the years, for informative reasons many of these
principles have been added as new specific rules into ch. 2 of
the CPA
however, there are still many principles which have not been
codified, but are still based on the case law only
many of them are closely connected to the prevention of
misleading and false marketing
after implementation of the UCPD, especially the effect test, the
central question will be, what is going to happen to these
do they remain or disappear?
1) The principle of general impression
lawfulness of marketing is evaluated on the basis of what kind
of general impression consumers do get after a reasonable
short acquaintance of advertisements
relevant information may not be presented by small letters at
the end of an advertisement
Market Court 2001:9.
In TV commercial subscription costs of mobile phones were
shown at the bottom of the screen in very small print, while the
call time and trade-in offer was spread across the screen. If a
specific subscription is advertised, typical user costs must be
indicated clearly. The commercial was regarded as unfair.
the significance of the new effect test to the principle of general
2)The principle of trader´s burden of proof
a trader must always be able to prove facts he presents in his
however, relevant is the difference between facts and matters
of taste
“cheapest in the town” is a fact which must be proven
“best service in town” is matter of taste which cannot be
this principle may also be found in art. 12 of the UCPD, which
mean that it will remain also in the future
Market Court decision 1997:2: Unproven Price Claims/
Price Guarantee
Oy PC-Superstore used in its marketing, e.g., the following
a)Finland’s cheapest computer chain store
b)Price guarantee: we will pay you back the price
difference at time of purchase if you could buy the same
product at a lower price from another shop.”
The company produced no proof that its products were
cheaper than similar products marketed by its competitors.
According to the Court, claims concerning a ‘lowest price’ are
not proven merely by the fact that the advertiser promises to
pay the customer the difference if he can find the same product
on sale more cheaply somewhere else. The Court regarded
marketing to be in conflict with the CPA.
3) Comparative advertising
may not be false or misleading
one may compare only products which have a similar purpose
of use
comparison has to be objective
only relevant features may be compared, e.g., price
the use of test results is accepted if the following conditions
are fulfilled:
tests itself have been made by objective third parties
only relevant features have been tested and compared
Market Court 2003:5 Use of EuroNCAP –test
Veho Ltd was marketing: “Mercedes Benz is safer than the
most safest Volvo on the basis of a recent EuroNCAP –test.”
However, the cars which had been tested by EuroNCAP
belonged to different classes. According to EuroNCAP-rules
cars from different classes may not be compared with each
others due to different technical and other features, e.g.,
weight. Because this rule had been infringed and the cars were
not directly comparable with each others, the advertising was
regarded as unfair.
4) Claims on environmental friendliness of marketed
Consumer Ombudsman´s decision in 1999: Marketing
of green electricity.
Kainuu Electricity had marketed eco-electricity using slogans
“Eco-electricity is the choice of families who care about the
environment”. However, in fact electricity with an eco-label
formed only 43% of the company’s total sales. The danger was
that the entire company’s electricity production will be given an
eco-label in consumers’ eyes. Emphasizing the environmental
effects of consumers choice of electricity was therefore
misleading and was regarded as unfair.
the influence of effect test in environmental claims?
5) The use of word “guarantee” in marketing
guarantee should always mean that a consumer receives a
certain benefit compared to his legal rights which are based on
the law
Market Court 1994:14 Satisfaction guarantee
A mailorder company used in its marketing concept ”satisfaction guarantee” which gave to consumers one week cooling off
–period. Due to the fact, that consumers already had the same
right on the basis of CPA ch. 6, the use of word guarantee in
marketing was regarded as unfair.
2.5. Supervision of marketing
1. General
Different models to supervise
in principle there are different possibilities to organise
supervision of marketing:
1)supervision may be taken care by:
a)state authorities or
b)consumer organisations or
c)self-regulatory bodies
2)supervision may be taken care by only one of these
alternatives (single model) or more than one at the same time
(combined model)
3)decision whether a marketing practice is unfair or not, may in
principle be made (a) in administrative procedure or (b) in court
Supervision according to the EU consumer law:
Unfair Commercial Practices Directive obliges (as the Misleading
and Comparative Advertising Directive before it) Member States to
ensure that:
1)state authorities and/or consumer organisations are entitled
to start
2)court procedure or administrative procedure in order to
prohibit unfair commercial practices (art. 11)
self-regulatory bodies - based on business self regulation - are
accepted only as a supplementary, but not as the only
supervisory system (art. 10)
2.The Nordic Model in the Supervision of Marketing
enforcement of consumers´ collective interests in the Nordic
countries is taken care by a special state authority, called as
the Consumer Ombudsman (CO)
CO is a state authority, whose task is to protect consumers´
collective interests by
1)supervising marketing practices
2)supervising the use of standard contract terms
3)promoting consumer interests in general
these authorities were established in all four countries between
years 1971-1978
the activities of the CO are in Sweden connected to the National
Consumer Agency, and in Denmark and Finland (in the latter
from January 2013) to the combined Competition and
Consumer Agency
The most relevant acts in force which regulate the
activities of the Nordic COs, are
in Denmark the Marketing Act 2005
in Finland the Consumer Protection Act 1978
in Norway Marketing Act 1972
in Sweden the Marketing Act 1995
English translations of these acts are available in the
following internet-pages:
Danish National Consumer Agency (
Finnish National Consumer Agency
Norwegian Consumer Ombudsman
Swedish National Consumer Agency
The competence of the Nordic Consumer Ombudsmen
in the supervision of marketing
1)preventive methods:
an extremely typical feature for the supervision of marketing in
the Nordic countries is the frequent use of preventive actions
the aim is to prevent any infringements of law by providing
information for the traders who are preparing new advertising
often these preventive actions are not based on the law, but
have been created in practice during the years
Different preventive methods
Advance opinion
is an opportunity (but naturally never an obligation) for an
individual advertiser to check beforehand whether a planned
marketing campaign is infringing the marketing law or not
on request, the CO will give an oral or written statement
regarding his view of the lawfulness of the planned marketing
once the CO has shown “green light”, he will not interfere on
his own initiative with an arrangement covered by the advance
opinion and implemented within a reasonable time of its
Marketing guidelines
COs have issued during the years non-binding marketing
guidelines in several sectors of business
they are mainly based on the existing case law
their purpose is to inform traders what kind of marketing
practices are infringing the law
a new trend: CO and branch organisations have prepared
guidelines together
2) repressive methods
In case infringements of law are observed:
a) in the first step, CO tries to persuade a trader to abandon in a
voluntarily way marketing which is regarded as unfair
b) in case persuasion fails CO is entitled to impose an injunction
order together with conditional fines in cases which do not have
major importance
 if the trader resists, this injunction becomes void except in
Norway, where the trader has to appeal in case he resists
 temporary injunction orders in urgent cases are available in all
four countries
c) take legal action against a trader in the court
 special courts have jurisdiction to decide whether marketing is
infringing the law or not
The Nordic Market Courts
Special courts whose jurisdiction is limited to a certain
areas of law only
in Finland: the Market Court (collective consumer law, unfair
competition, competition law, and in the near future also IPRissues)
in Sweden: the Market Court (collective consumer law, unfair
competition, competition)
in Norway: the Market Council (collective consumer law, unfair
competition law)
In Denmark: the Maritime and Commercial Court of
Copenhagen (also maritime law and other commercial law)
If the Nordic Market Courts regards marketing practice
as unfair, the following sanctions are available:
1) injunction order
the purpose of this order is to prohibit the trader to carry on its
illegal activities
in most Nordic countries an injunction order is strengthen with
a conditional fine (which has to be paid only if the same
infringement is repeated)
2) corrective advertising
an obligation to correct the information given in unfair
marketing, normally by a totally new advertisement
in practice the significance of corrective advertising has been
rather small, because marketing campaigns have in practice
ended a long ago before the judgment is given
3) market disruption fee
has been available in Sweden since year 1996
available if the trader acts intentionally or if he by carelessness
violates the detail rules of the Swedish Marketing Act
the ordered fee may be from SEK 5 000 to 5 000 000, (the latter
about EUR 500 000), but not more than ten percent of the
trader´s annual turnover.
disruption fee is an alternative sanction to an injunction order
it should be used in serious cases only, and in practice it has
been used rather seldom
No criminal sanctions or compensation of damages
these questions are dealt in general courts only
in practice criminal sanctions have been used very seldom
3. Evaluation of the Nordic enforcement system
from the viewpoint of effective consumer protection
1) in the beginning of the establishment of the Nordic consumer
protection system, serious attention was paid, not only to
substantive law, but on the enforcement of consumers´
collective interests
2) enforcement of consumer protection has been the sole task of
the Nordic ombudsmen and consumer authorities
so far there have been no fear that the fulfilment of other
tasks, especially, enforcement of competition law, would
have started to dominate their activities by using majority of
the available resources
what is going to happen in Denmark and Finland where
consumer and competition authorities have been merged?
3) the channeling of consumers´ collective protection -cases to
special courts instead of general courts has created more
consumer –friendly case law
4) the wide use of soft law –methods has in practice been very
most of the traders are willing to change their marketing
practices voluntarily, especially in clear cases, in order to
avoid bad publicity caused by a potential procedure in the
Market Court
5) soft law need hard law as a backing
without the possibility to use sanctions if necessary, the
persuasive methods would not be so successful as they
have been now in practice
6) the lack of other sanctions than injunction makes the system
sometimes rather toothless
it is possible for unscrupulous traders to continue - at least
for a while - and repeat the infringements in some similar,
but also unfair form
7) larger competence to issue injunction orders?
should Cos have larger competence to issue injunction
order without a need to start a court case in Market Court?
3. Regulation and Supervision of Crossborder Marketing
3.1. General
Cross-border Marketing means marketing in which
a trader is marketing consumer goods or services
from one country (source country)
to consumers who are domiciled in an other country
(target country)
The basic problems in cross-border marketing:
1) the differences between the substantive rules in source and
target countries
even in areas, where EU has adopted consumer law
directives, the aim has been to set a common minimum
standard of protection, not to harmonise national laws
marketing which is full in accordance with the laws of the
source country, may infringe the laws of the target country
2) the marketing may be directed only to consumers domiciled in
other countries than where the trader is domiciled
the consumer authorities/organisations in the source
country do not have interest to interfere in such marketing
3) there are often differences between MSs how actively the
consumer authorities/organisations are supervising marketing
these differences are based on supervisory traditions, level
of motivation, available resources, etc.
4) the consumer authorities/organisations in the target country are
often powerless: in practice it may be difficult to enforce
remedies against a foreign trader
Two opposite models of regulation and
There exists two opposite models to regulate and to supervise
cross-border marketing. These systems do not have to exclude
each others; they may also be parallel or supplementary
The home country principle (principle of the country of origin)
 the level and substance of regulation is determined by the
country in which the trader is domiciled (the source country)
 also the compliance of regulation is supervised by the
authorities and/or organisations of the source country
 political background: internal market -argument
The target country principle
 the level and substance of regulation is determined by the
country or countries in which the effects of an infringement
may be seen (the target country)
 also the compliance of regulation is supervised by the
authorities or organisations situated in the target country
 political background: consumer protection -argument
3.2. Satellite advertising
TV directive (89/552/EEC, OJ N:o L 298, 17.10. 1989)
The transmitting state principle
is one application of the home country principle
art.2.1.: transmitting Member State must ensure that all
television broadcasters under its jurisdiction comply with the
law on that State
art.2.2.: receiving Member State must ensure the freedom of
reception and it is not allowed to restrict retransmission of
television broadcasters from other Member States, for reasons
which fall within the fields coordinated by the directive
De Agostini -case: C-34/95 in the ECJ
Facts of the case:
De Agostini -company was using services of a British company
which broadcasted television programmes by satellite from the
UK to Denmark, Sweden and Norway
De Agostini -company advertised a kids magazine which was
published in series, each consisting of several issues
with each issue came a part of a model dinosaur: in order to
build one dinosaur, all issues of one series had to be collected
the Swedish CO took legal action against the De Agostinicompany in the Swedish Market Court for two reasons:
1)television advertising to children under 12 years was
forbidden according to the Swedish Broadcasting Law
2)advertising was misleading because it did not contain
information how many issues belong to each series and what
was the total price of one series and one model dinosaur:
it contained only the price of one individual issue
the Swedish Market Court asked ECJ to a give a preliminary
Decision of the ECJ was quite predictable:
1) the TV-directive allows advertising to children in case certain
basic conditions are fulfilled
 the Swedish authorities were not allowed to totally forbid
cross-border television advertising which was directed to
2) the TV-directive did not prevent the consumer authorities in the
target country to take legal action against cross-border
television advertising in those fields which were not
coordinated by the TV-directive
 as the TV-directive was not regulating misleading advertising,
the Swedish authorities were entitled to take legal action
against cross-border misleading advertising
So, in the satellite advertising the both principles may
be used at the same time:
1) the home country principle in those fields which are
coordinated by the TV-directive
2) the target country principle in those fields, which are not
coordinated by the TV-directive
Audiovisual Media Services Directive (AVMSD) 2007
is in fact a revised version of TV-directive 1989
its scope of application was expanded to cover also the so
called on-demand AVM –services
surprisingly, the content of the transmitting state principle was
not changed, or even clarified!
this means that DeAgostini –case has not lost its significance
target countries have still right to take legal actions against
cross-border TV-advertising in those fields which are not
coordinated by the AVMSD-directive
a codified version of the AVMSD-directive was published in
year 2010 (2010/13/EU, OJ L 95, 15.4.2010)
3.3. Cross-border e-commerce
Electronic Commerce Directive (2000/31/EC, OJ L 178,
is mainly based on the home country principle (art.3.1.-3.2.)
however, the target country may take measures against crossborder electronic marketing in case two conditions are
measures are necessary in order to protect, e.g., public
order, public health or consumers (art. 3.4.)
the target country has asked - without adequate results - the
home country to take measures against illegal marketing
the influence of DeAgostini-case may be clearly seen in this
3.4. Different methods to develop regulation
and supervision of cross-border marketing
Problems in enforcement
even if we adopt the target country principle in the
regulation and supervision of marketing, one central
problem still remains:
how the authorities in the target countries may in practice
enforce sanctions against companies domiciled in other
Different alternatives to improve enforcement
1)the principle of entity
2)free movement of actions for injunction
3)cooperation between the national supervisory bodies
4)harmonisation of the substantive marketing law
1)The Principle of Entity
originates from competition law:
all companies belonging to the same multi-national group
of companies are liable for infringements of law caused by
any of its parent or subsidiary companies
has already been used at least in Finland
The Finnish Market Court 1987:13. McDonalds was marketing
its products via satellite television from Britain to Finland. The
Finnish CO took legal action in the Finnish Market Court
against the Finnish subsidiary company of the multinational
company in question – McDonalds Osakeyhtiö. The court
stated that the Finnish CPA was applicable in the case due to
the fact that marketing was intentionally targeted also to the
Finnish consumers. The injunction order with a conditional fine
was imposed to McDonalds´ Finnish subsidiary company.
2)The free movement of actions for injunction
The directive on injunctions for the protection of consumers‘
interests (injunction directive) (98/27/EC, OJ N:o L 166, 11.6.1998)
(a codified version 2009/22/EC, OJ N:o L 110,1.5.2009)
The main content of the injunction directive
 traditionally the right to take legal action against traders have
been reserved only to the consumer authorities/organisations
in the same country where trader is domiciled
 MSs are obliged to ensure so that also qualified entities (which
may be consumer authorities, consumer organisations or trade
organisations) in target countries are entitled to take legal
actions for injunction in source countries when an infringement
affects to the interests of consumers in the target country
where the qualified entity has its domicile
 the right to bring an action for injunction is limited to those
consumer issues where the EU has adopted consumer law
directives (as transposed into the internal legal order of the
Evaluation of the injunction directive:
the injunction directive does not solve problems which are
based on differences in substantive law between the MSs
the right to bring an action for injunction in the source
country is useless when the substantive rules or the case
law are stricter in the target country than in the source
country (as it was in De Agostini-case)
who finances the cross-border actions?
legal expenses cause an economic risk which in practice
prevents cross-border litigation in a quite effective way
when authorities and organisations are working with limited
financial resources
practical relevance of this directive
how many times it has been used in practice?
3)Cooperation Between National Supervisory
I. Informal cooperation
the International Consumer Protection and Enforcement
Network (ICPEN) (
was established in 1992
it consists of national, normally supervisory bodies from more
than 40 different countries
exchange of information, collaboration (e.g. sweep days in
internet), yearly meetings, etc.
may be used between all countries, not only between the EU
Member States
II. Formal collaboration
Regulation on Consumer Protection Cooperation (N:o 2006/2004,
OJ N:o L 364, 9.12.2004)
every MS must have a consumer authority, who has
jurisdiction to deal with cross-border marketing
indirect effect in some countries, e.g., in Netherland
consumer authority in the source country (requested authority)
is obliged, on the request of consumer authority in the target
country (applicant authority), to take all necessary measures to
cease illegal cross-border marketing in the source country (art.
the requested authority may, however, determine which
measures will be taken (art. 8.2.)
in case legal action in a court is taken, the applicant authority
has to pay the legal expenses which the plaintiff is liable to pay
to the defendant if the case is lost (art. 15.1.)
4)Harmonisation of the Substantive Law
The starting points
1) collaboration between supervisory bodies is useless if crossborder marketing which infringes the law of the target country
is in accordance with the laws of source country
2) directives which are based on minimum clauses
(a)do not eliminate the differences in substantive rules between
the MSs on the consequence
(b) that they are conflicting with the Internal Market -argument
Full harmonisation of legislation on unfair marketing practices
 first efforts: Unfair Commercial Practices Directive 2005
 shows the new trend in the EU Consumer Law
instead of minimum clauses (and minimum level of
protection), the aim is now full harmonisation (and
abolishment of the differences between the national
legislation of the MSs)
 in case it works, the choice between home and target country
principles becomes less important than nowadays
UCPD: will its aims be achieved?
1) is it really possible to harmonise national rules concerning
marketing by using general clauses?
general clauses are legal instruments which delegate the
decision-making power from the Parliament to courts
general clauses will be applied by the national courts in 27
different MSs
when taking into account (a)unclear concepts used in the
UCPD (e.g., average consumer, effects on consumers’
economic behaviour) and (b)differences in cultural and legal
traditions of the MSs, it is more than obvious that the case
law (created by national courts) will differ between MSs
the consequence: the differences between the substantive
laws of the Member States may not be abolished by the
2) is it really possible to ensure that the supervision of marketing
would in practice be at the same level in all Member States?
the efficiency of supervision often depends on motivation
and available resources of the supervisory bodies
most probable there will be remarkable differences
3) if full harmonisation of the national legal rules may not be
achieved, the choice between home and target country
principle still remains relevant from the viewpoint of consumer
 in the home country principle the lawfulness of marketing may
be determined by a country in which the level is lowest if the
trader is domiciled in that country
4) is UCPD based on home or target country principle?
 Commission´s first proposal (COM (2003) 356 final)
Traders shall only comply with the national provisions of the Member
State in which they are established (art. 4.1.)
Member States shall neither restrict the freedom to provide services
nor restrict the free movement of goods for reasons falling within the
field approximated by this Directive (art. 4.2.)
due to resistance of many MSs the article 4.1 was dropped
away and only article 4.2 was left to the final Directive
what does it mean? Is the home country principle the only
possible principle of regulation and supervision or may target
countries also take measures against cross-border marketing
which infringes the laws of target countries?
this issue will be decided later on by the ECJ
Traditional view how contracts are concluded:
basic presumption: (1)equal parties (2) agree
individually each contract terms (3)after negotiations
pacta sund servanda: the contract binds both parties
according to its terms
the legitimacy of pacta sund servanda –principle is
based on the presumption of equal parties
Reality in consumer contracts:
The parties, consumers and traders, are in most cases
1) the lack of information: consumers do not in the
most cases have enough information (quality, price,
other terms) which is necessary to conclude a good
2) the unbalanced negotition power: even if well
informed, consumers do not have as much as
influence on the content of contract terms than
good example: the wide use of standard contract
terms in practice
 the presumption on equal parties does not
correspond with the reality
 consumers need protection in their contractual
relations with traders
Different Methods to Provide Protection in
Consumer Contracts
1) Cooling off -periods
definition: consumer's right to withdraw from a
contract with in a certain time (normally from 7 to 14
days), without penalty and not having to give a
 cooling off- periods, based on the law, are normally
provided in those types of contracts in which it is
typical that:
a)consumers do not have the possibility to compare
the price and quality of the marketed product with
other similar products before making their decision
Doorstep Selling Directive, art.5
b)consumers do not have an opportunity to check
the product before the contract is made
Distance Selling Directive, art.6
c)aggressive methods of marketing are often used
Timeshare Directive, art. 6
d)there is a risk of consumer´s over-indeptedness
Consumer Credit Directive (2008), art. 14
the length of cooling off-period in these directives
depends on whether or not the trader has fulfilled his
obligation to provide to a consumer certain information
referred to in the directives
Cooling off –periods based on a contract
cooling off-periods based on law should not be confused
with cooling off-periods based on an individual contract
only (latters are usual, e.g., in big department stores)
2) Mandatory provisions of consumer contract
definition: the parties are not entitled to conclude
individual contracts imposing worse terms regarding
to the weaker party than is provided by the
mandatory provisions of law
Sale of Consumer Goods Directive (99/44/EC)
 especially in the sale of goods the essential
questions on consumer contracts have often been
regulated by mandatory provisions of law. These
question are, for example:
a) goods conformity with the contract
when a product is defective
Sale of Consumer Goods Directive, art. 2
b) burden of proof concerning when the lack of
conformity exists
Sale of Consumer Goods Directive, art. 5.3.:
 any lack of conformity which becomes apparent
within six months of delivery is presumed to have
existed at the time of delivery, unless proved
otherwise (so called legal guarantee)
c) rights of the consumer (remedies) in the case of a
lack of conformity
Sale of Consumer Goods Directive, art. 3.:
 in the first place, repair free of charge or
 if not possible or if not done, reduction of price or
the right to have the contract rescinded (the latter
only in case the lack of conformity is not minor)
d) minimum time limit for liability
Sale of Consumer Goods Directive, art. 5.1.:
 at least two years from the delivery of the goods
in Finland there is no maximum time for seller*s liability
however, consumer has the burden of proof whether a four
year ago bought product was defective already at the time
of delivery
e) minimum time limit for complaining
Sale of Consumer Goods Directive, art. 5.2.:
 consumer must inform the seller within two months
from the date on which he detected the lack of
conformity (in Finland no exact time limit, only in reasonable
However, it is not possible or even sensible to regulate
all potential contract terms by mandatory provisions
a wide area of different kind of questions will always stay at
the parties to agree
that is why, there is also a need for other methods to
balance the contractual relationship between the parties
3) Prohibition to use unfair contract terms in
consumer contracts
the main aim: to prevent the use of unfair terms in
consumer contracts
Unfair Contract Terms Directive (93/13/EEC)
Definition: unfair contract term is a contractual term
which causes a significant imbalance in the parties´
contractual rights and obligations
scope of application:
only standard contract terms, not individually negotiated
co called core terms, included price terms, stays out of the
scope of directive
the MSs have a right to choose whether to regulate
unfair contract terms by (1) a general clause or
(2) more specific rules or by (3) a combination model
The annex of Unfair Contract Terms Directive
it contains so called grey list of contract terms which
may be regarded as unfair
typically unfair contract terms in the list are often
connected to the following items:
 trader has a right to make changes to the contract
terms including the price without consumer´s
 trader has excluded or limited his legal liability in
case he breaches the contract
 sanctions which are available for consumer´s
breach of contract are very hard
 arbitration clause which excludes access to the
Supervision: Unfair Contract Terms Directive, art. 7:
MSs are obliged to ensure that adequate and
effective means exist in order to prevent the use of
unfair contract terms in standard contracts
the choice between different supervision systems
has been left to the MSs: they may give to authorities
and organisations
1)a right to take legal action against a trader who is
using unfair terms in standard contracts (court
procedure) or
2)only a right to complain to an authority which task
it is to decide whether a contract term is unfair or not
(administrative procedure)
supervisory system is similar to the UCPD
In the Nordic countries the system to regulate and
supervise unfair contract terms is rather similar than
in the marketing:
1) the fairness of contract terms is mainly regulated by
general clauses
no combination model has been used here
case law is in practice the main source of information
2) the Consumer Ombudsman tries to prevent the use
of unfair contract terms
a)the CO first tries to persuade a trader to abandon the use of
unfair contract terms
b)in case persuasion fails, the CO may issue a permanent (in
case trader does not resist) or a temporary (in urgent cases)
injunction order
c)finally the CO is entitled to take legal action against trader in
the Market Court
3)negotiations with branch organisations
a preventive method
 is not based on the law, but has been created in
practice during the years
 standard contract terms have been negotiated
between CO and branch organisations in several
branches of business
 a good example in Finland: Package Travel Contract
 negotiations does not necessarily mean that the CO
approves all the contract terms in the negotiated
standard contract terms, but he approves most of
Benefits connected to these negotiations:
1)from traders´ point of view:
the probability that CO would take actions against
negotiated contract terms is in practice quite small
it makes the system more predictable
2)from consumers´ point of view:
law prohibits only the use of unfair contract terms
by negotiations it is possible to add to the standard
contracts new terms which improve consumers´
contractual position compared to the earlier used
terms, and even compared to the mandatory
provisions of consumer contract law
example: consumer´s right to withdraw from a
package travel contract with rather small expenses
4)voidness and adjustment of unfair contract
terms in individual contracts
it is a repressive control method
Unfair Contract Terms Directive, art. 6.1:
unfair contract term do not bind on a consumer in an
individual contract
in disputed cases consumer has to take the case to
a court or another dispute settlement body, which
will consider the unfairness of a contract term
weakness of this method is that
1)consumer has to be active - and sometimes wealthy enough to take the case to a dispute settlement body
2)it has directly legal effect on the disputed case only: other
similar unfair terms in contracts made by other - passive consumers stays still valid
Two possible legislative alternatives when a contract
term is regarded as unfair:
a) the court or an other dispute settlement body
declares the unfair contract term as void
b) the court or an other dispute settlement body may
adjust the unfair contract term
Adjustment of a contract term:
 a court or an alternative dispute resolution body
changes the content of an individual contract term
 is a typical feature to the Nordic consumer law
 even the so called core terms including the price of
the product may be adjusted in the Nordic countries
5) transparency and interpretation of contract
Unfair Contract Terms Directive, art. 5:
1)contract terms must always be drafted in plain and
intelligible language
2)in case there is any doubt about the meaning of a
standard contract term, the interpretation which is
most favourable to the consumer prevails (in dubio
contra stipulatorem)
Future of EU Consumer Contract Law
review of former consumer protection rules (so
called consumer acquis)
 all former contract law directives have been based
on minimum clauses
 the review of the consumer acquis is based on the
idea of full harmonisation
 this means that minimum clauses will no more be
 those MSs who have used their right to provide
better protection to their consumers (especially the
Nordic countries) are afraid that new directives will
mean weaker consumer protection in the future
Proposal for Directive of Consumer Rights2008
the draft was published in October 2008 (COM(2008)
614 final)
was based on full harmonisation
its aim was to replace four former minimum
directives from years 1985-1999
 Sale of consumer goods (99/44/EC)
 Unfair contract terms (93/13/EC)
 Distance selling (97/7/EC)
 Doorstep selling (85/577/EC)
The main problems in the proposal
1)from the viewpoint of consumer protection: the
proposal was mainly based on the former minimum
directives without any bigger changes
minimum level of protection had suddenly became also the
maximum level of protection!
how did this fulfil the requirement of EC Treaty: high level of
protection to consumers?
those countries who had used the opportunity to give better
protection to their citizens, would have been forced to lower
down their former level of protection
2)from the viewpoint of internal market: many relevant
contract law issues (e.g. right to compensation),
which harmonisation would have been utmost
essential had been left totally open in the proposal
Some examples
Time limit for seller´s liability
 maximum time limit for seller´s liability would have
been two years from the delivery of the goods
new time limit and sustainable consumption
in the present directive two years is only the minimum time
in Finland no fixed time limit is used
however, consumer has the burden of proof
cars, televisions and other durable goods
what kind of message it will sent to the producers?
the new role of commercial guarantees?
the conditions for compensation of damages had
been left totally unregulated
the decision-making power on these questions had
been left to the MSs:
 under what conditions is the seller liable to
compensate the damages?
• strict liability, liability based on negligence (with or
without turned burden of proof)
what damages should be compensated?
• only direct damaged or also indirect damaged?
calculation of the size of damages
• only real damages or also punitive damages?
Full harmonisation of Consumer Contract Law
Is it desirable?
this is naturally a highly political question
answers to the question:
 from the viewpoint of businessmen: yes
 from the viewpoint of consumers: no, minimum
protection is enough, especially when the new
proposals are not based on high level of
Is it possible?
1) practical problems: poor quality in law drafting
 the new full harmonisation directives are not based
on careful preparation
 they contain a lot of unclear definitions, which will
be most probable interpreted differently in the MSs
 they contain a lot of unregulated questions (e.g. tort
law), which will be still regulated differently in MSs
2) principal problems: differences between the
Members States in legal traditions, social values, etc.
 even full harmonisation directives are implemented
in a way which fits to their legal system, correspond
their social values, and enforced in way that fits to
their traditions
3) experiences from the new UCPD do not convince
Basic division: product safety and product liability
I. Product Safety
legislation and supervisory activities which aim is to prevent
that dangerous products are sold to consumers
is a part of the protection of the consumers´ collective interests
General product safety:
all areas of product safety which are not regulated by sectoral
Special product safety:
product safety regulation which scope of application is limited
to a certain consumer goods only (e.g. toys, cosmetics,
medicines, electrical appliances)
General Product Safety
Product Safety Directive (2001/95/EC, OJ N:o L 11,
15.1. 2002)
producers may place on the market only safe
products (art.3.1)
directive sets rules for market surveillance
prior acceptance given by authorities
 is only needed in the Member State where the
product was first placed on the market
 this principle is not mentioned in the directive, but
is based on the case law of the ECJ (Cassis de
Dijon –principle)
Member States are obliged to:
1)establish or nominate authorities which task it is to
take care of the supervision (art.6.2)
the supervisory task may not be left to consumer
organisations alone
2)take care that these supervisory authorities have
necessary measures available in case they suspect
(checks, information, samples) or notice unsafe
products in the market (sale prohibition, recall,
etc.)(art.6.2., art. 7, art.8)
the authorities are entitled to make by themselves
a decision whether a product is dangerous or not
without a need to take legal action in a court
compare the system to the supervision of unfair
marketing and unfair contract terms!!
II. Product liability
it is a part of the protection of consumers´ individual rights
is a part of tort law
it is question of
liability for damages caused by a defective product
to a person or other property than the defective product
Product Liability Directive (85/374/EEC)
it is a full harmonisation directive
scope of application:
a) personal injuries caused by defective products irrespective
whether the product was in private use or not
b) damages to property other than the defective product itself if
the defective product was meant for private use or
consumption and primarily used for such purposes
The liable parties:
1)a producer, who is domiciled in one of the MSs
2)if the product has been produced outside the internal market,
the trader who has imported it to the internal market
3)a trader, who presents himself as its producer by putting, e.g.,
his trade mark on the product
The injured person has to prove:
1)the damage or injury
2)the causal relationship between the defect in the product and
the injury or the damage
3)the lack of safety in the defective product: the product is not as
safe as consumers may reasonable expect
producer´s liability is strict: negligent behaviour from his side
is no more needed
importer´s and seller´s liability is still based on negligence
The Cross-border Nature of Product Liability Cases
a person who has suffered damages may have to start a crossborder litigation in case he prefers to claim compensation on
the basis of strict liability
for example, an Estonian consumer has bought in Estonia an
electrical appliance, which has been made in Italy. In case this
appliance causes an accident in Estonia due to its poor quality,
the Estonian consumer has to take legal action against the
Italian producer instead of Estonian seller or importer
the court procedure may take place in Estonia, but the
judgment has to be enforced in Italy
it might be a better idea to take legal action against the
Estonian seller or importer on the basis of negligence
Case studies: Product Liability and Tobacco
Two Finnish court cases - is a producer of tobacco
products responsible for personal injuries caused by
his products?
The first case: Pentti Aho v. Rettig Oy and Suomen
Tupakka Oy
the case started already in 1988 (being the first tobacco case
in Europe), two years before the Finnish Product Liability Act
(PLA) and strict liability entered into force: at that time
producer´s liability was still based on negligence
the plaintiff smoked from year 1941 to 1986 and got several
serious diseases which are typical for heavy smokers,
including cancer
he died of these diseases during the procedure in 1992, but his
inheritors continued the case
Before the PLA plaintiff had burden of proof on
negligence of the tobacco companies
causal relationship between smoking and his diseases
damage and its size
the medical relationship between smoking and cancer was
statistically clear already in 1950´s
the advertising of tobacco products was banned in Finland by
the Tobacco Act 1976 and warning labels in cigarette boxes
came compulsory in 1986
before year 1976 tobacco companies had advertised their
products decades without warning their customers about the
dangers connected to their products
The Helsinki Court of First Instance dismissed the case
in 1992 for the following reasons:
1)the tobacco companies had not act in negligent way
a)because selling tobacco products had been legal
during all these years
b)tobacco companies had not been shown to infringe
the rules which regulated advertising of tobacco
products before advertising of tobacco products was
totally banned in 1976 (the CPA into force in 1978)
2)because the existence of negligence was a basic
condition for liability, the Court did not study att all
the causal relationship between plaintiff´s smoking
and his diseases
The Helsinki Court of Appeal dismissed the case in
1998 :
1)the tobacco companies had mislead consumers – and had been
negligent – because they had not informed consumers on the
health risks connected to the smoking
2)however, the plaintiff had not been able to prove the individual
causal relationship between smoking and his diseases
The Supreme Court dismissed the case in 2001:
1)the causal relationship between smoking and the diseases of
the plaintiff had been shown by a strong statistical relationship
2)in spite of the fact that advertising of tobacco products had
been misleading, the tobacco companies had not acted in a
negligent way, because the plaintiff had been aware of the health
Assessment of the first tobacco case
1)The causal relationship between smoking and
 what amount of evidences is in practice needed to
proof the causal relationship in tobacco liability
smoking is not the only possible reason for these diseases,
although it is the most probable reason when the patient
has been a heavy smoker
in individual cases it may be in practice impossible to prove
that smoking has been the main reason for the plaintiff´s
relevant questions in this context:
should the case be dismissed always when there is even a
small possibility that a cancer has not been caused by
should the evaluation of evidences be based more on the
fact which reason has been most probable?
the Finnish Supreme Court chose the latter alternative in
2001: a strong statistical relationship was enough
2)The significance of smoker´s contributory negligence
smoker´s do nowadays certainly know that smoking
may cause cancer because of health education and
warning labels in each cigarette box
should the compensation be totally or partly denied
because of this reason?
the Finnish Supreme Court in 2001: smoker´s own
behaviour was a reason to deny the compensation totally
interesting questions in this context are:
how does the smoker`s impression on the size of risk
correspond with the real size of the risk?
smoking causes a strong addiction especially after long and
continuous use. Is a heavy smoker in a position where
he/she is able to make totally free choices any more?
this latter question was not dealt at all in the first case!
The second case: the light cigarette case
four light cigarette smokers took legal action against
Amer-Yhtymä Oyj and British American Tobacco
Nordic Oy in March 2005
the plaintiffs claimed that the defendants had, by
marketing light cigarettes, given intentionally an
impression that smoking of light cigarettes was less
dangerous than smoking of ordinary cigarettes
concerning time period after September 1991, these
cases are based on Product Liability Act and on
strict liability
Finnish Product Liability Act (694/1990)
“This Act applies to the compensation for injury or damage
caused by a product
a)to a person
b)property meant for private use and primarily used for
such purposes by the injured party” (Art. 1)
“Compensation shall be paid for an injury or damage in
case the product has not been as safe as could have been
expected” (Art. 3)
Government´s Proposal on Product Liability Act
“an injured person may not claim compensation for
damages caused by well-known dangers, such as smoking
of tobacco products”
Parliament´s Second Law Committee (II LaVM 4/1990)
because tobacco industry still denies that smoking has
negative consequences on health and has not warned
consumers on the base of its own initiative, the official
warnings (labels in tobacco packets) may not release
producers from their liability
attention should also be paid to the strong addiction
caused by continuous smoking
Conclusions on the basis of Law Committee
tobacco is without any doubts a product which is meant in
Product Liability Act art. 1 and the Act is applicable also to
tobacco products
still open question: is tobacco always a product which is meant
in art.3. :”a product which is not as safe as could have been
expected (lack of safety)”
The Helsinki Court of First Instance dismissed the case in 2008 for
the following reasons:
1) the plaintiffs were able to prove the causal relationship
between smoking and their diseases
2) the lack of safety did not exist as consumers must have been
aware of the dangers connected to tobacco products at least
starting from 1970´s
3) for the same reason, they had taken a conscious risk
by continuing smoking
4) light cigarettes are less dangerous than normal cigarettes, so
the marketing of light cigarettes had not been misleading
5) nicotine addiction makes its more difficult to stop smoking,
but not impossible
the Helsinki Court of Appeal dismissed the case in May 2010
the plaintiffs sent a leave to appeal to the Supreme Court in
August 2010, but cancelled it when they agreed with the
tobacco companies that both parties would take care of their
own expenses they have had in the previous instances of court
What happens if a plaintiff wins next time?
the general effects may remain quite small, because the so
called punitive damages are not known in Finland
tobacco companies have to take into account in their economic
calculations the possibility of other similar cases in the future,
which might rise the prices of tobacco products
however, it is obvious that the amount of court cases will be
quite small because the risk of legal expenses (which in these
kinds of principal cases are normally very high)
the public health care system reduces the need to seek
monetary compensation by court actions
are the court actions a right way to distribute the costs of
tobacco deceases or are other methods, e.g., taxation, more
6.1. General
Different types of consumer disputes:
1)individual consumer disputes: one consumer
against one trader
2)mass consumer disputes : several individual
consumers have disputes in which both the facts
and norms are identical to each others (mainly
against the same trader)
3)domestic and cross-border disputes: the disputing
parties have domicile in the same country (domestic
dispute) or in different countries (cross-border
Domestic Consumer Disputes
consumer disputes in which consumers and traders
have their domicile in the same countries
in principle there are two alternative ways to settle
individual consumer disputes if the two-party
negotiations between a consumer and a trader have
1) normal civil procedure in a court
2) alternative dispute resolution (ADR) mechanisms,
mainly some kind of out-of-court procedures
Civil Procedure
The basic problem in the normal civil procedure in courts: the
ordinary civil court procedure is in most cases inapplicable for the
settlement of consumer disputes for the following reasons:
1)expenses: the high costs of litigation especially when
compared to the economic interest of the case
 the cost rules: a losing party is often obliged to pay also the
legal expenses of the winner
2)the slowness of the procedure
 especially because of the appeals to the higher instances
3)psychological barriers: many people are not willing to
participate in a court procedure even if the legal expenses stay
in a moderate level
4)inapplicability to solve mass consumer disputes: in a traditional
system all consumers who want to obtain redress have to take
part in the trial
6.2. Alternative Dispute Resolution
means alternative to a normal civil procedure, in
most cases some kind of out-of court procedure
it is possible to identify several different ADRmodels to settle individual consumer disputes in the
EU Member States, e.g., the following ones:
1) the Nordic model: public dispute boards
established and financed by the state
decisions of these boards are only recommendations and cannot be put into force (except in
general jurisdiction: they handle complaints
concerning most sectors of business, including nonorganised traders
no firm and fast rules concerning how the procedure
should be carried out
the procedure is totally written: no oral hearings
the number of decisions complied with varies
between 70-75 per cent
ensuring that decisions are obeyed:
-the use of bad publicity (Finland)
-guarantees given by trade organisations, etc.
-enforceable decisions (Norway): the best
2)the Dutch model: the co-operative sectoral
the system consists of separate boards in several
branches of business
 these boards have been established and are run by
trade and consumer organisations together
 there is a common umbrella organisation, e.g. to
issue minimum procedural standards and to
distribute economic resources
 boards accept only complaints against organised
 oral hearings usual
 the decisions are enforceable
3)The Common law model: simplified court
special simplified procedures in ordinary courts of
first instance or totally new and separate courts for
small claims
 often called as small claims courts or tribunals
 originates and still most popular in common law countries
 basic idea: there is no need for lawyers, parties
should be able to appear in a court without a legal
 in Britain, Ireland and Malta
 nowadays possible also in Denmark and Norway
The common features of these courts:
the procedure has been made simpler and more
informal in comparison to the normal civil procedure
a no-cost rule has been adopted
the judge should try to mediate between the parties
in order to achieve a conciliation
the possibility of appealing to higher courts is
strongly restricted
the procedure is available in most civil law disputes,
but only if the amount involved in the dispute does
not exceed a certain sum of money
Disappointing experiences concerning small claims
they are mainly used in collecting debts by traders
attorneys are frequently used in these courts, largely by traders
court personnel do not advise the ordinary citizens enough
judges often find it difficult to change from a passive to a more
active role
Legal reforms in some countries (at least in Ireland,
Australia, New Zealand and in some states in the USA):
the use of attorney's has been prohibited in small claims courts
the use of small claims courts in normal debt collecting by
traders has been prohibited
4) the Iberian model: consumer arbitration procedure
special arbitration procedure for consumer disputes, especially
used in Spain and Portugal
decisions are enforceable
procedure covers only those traders
a)who are members of a certain branch organisation or
b)who have given their acceptance to the procedure in some
other way
5) the Central-European model: private sectoral boards
private, sectoral boards established and financed mainly by
trade organisations only
common, e.g., in Germany, Belgium and Austria
6) the Baltic model
consumer disputes are solved by administrative bodies, who
also has task to protect consumer´s collective interests
administrative fines may be imposed to traders who neglect to
comply with the decisions
used in Estonia, Latvia, Lithuania
Conclusions and EU initiatives
the amount and quality of ADR –bodies varies a lot between
various MSs
one of the central problems has been the coverage of ADRbodies: in many countries there exists several branches of
business where consumers have no access to any ADR –body
EU adopted in years 1998 and 2001 two recommendations
however, the purpose of these recommendations was to ensure
that already existing ADR -bodies fulfil certain minimum
requirements, not to solve the problem of lacking coverage
finally, in November 2011, EU published a proposal on ADRdirective (COM (2011) 793 final)
the purpose of this directive is
oblige MSs to establish an ADR-system which covers all
consumer disputes (by using the already existing system, if
make certain procedural minimum requirements binding
6.3. Group Action for Compensation
Group action is a court action in which
a)a plaintiff, either a member or a non-member of a
specified group
b)brings a legal action in a court for the benefit of a
specified group
c)without the express permission of the group
members, and
d)this results in a judgement that is binding both for
and against all the members of the group
Based on who the plaintiff may be, group actions may be divided
into three different types:
1) class actions (plaintiff is a private person)
2) actions by organizations (plaintiff is, e.g.,
a consumer or environmental organization)
3) public actions (plaintiff is a state or municipial authority)
In the area of consumer protection, group action can be used:
a) action for injunction
 in most European countries action for injunction is available as
a method to protect consumer´s collectice interests
b) action for compensation
 at this moment this kind action is still quite rare in Europe
outside the Nordic countries
 more common outside Europe (the United States, Canada and
Australia as most famous examples)
Nordic group actions for compensation
1) The Swedish Group Action Act (SFS 2002: 599)
entered into force in January 2003
so far about 10 cases altogether, many still pending
2) The Norwegian Group Action
chapter 35 of the new Norwegian Act on Civil Procedure
entered into force in January 2008
3) The Finnish Group Action Act (444/2007)
entered into force in October 2007
so far no cases
4) The Danish Group Action
entered into force in January 2008
so far at least one pending case
Scope of application:
is in most Nordic countries general: group action is possible in
all kinds of civil disputes on the condition that they fulfil the
general requirements of group actions, e.g.,
1)it is question of disputes where the facts are identical or at
least identical and
2)it is sensible to handle these disputes together in one trial
in Finland scope of application is restricted to only mass
consumer disputes
Types of group action available
in Denmark, Norway and Sweden the plaintiff may be a member
of the group (class action), an organisation, who is protecting
the interests of a certain group of citizens (action by
organisation), or state authority, as the Consumer Ombudsman
(public action)
in Finland only a public action, in which the CO acts as a
plaintiff, is possible
How the group is formed?
in group actions judgements have legal effect for all members
of the group, although they are not parties to the case
there are two opposite ways how the group may be formed: opt
out or opt in
opt out:
all persons who fill certain requirements become
automatically members of the group
those, who do not want to be members of the group have to
use their right to opt out
opt in:
only those persons, who have joined the group by
registration, will be members of the group and will be
covered by the judgement.
in Sweden and Finland only opt in –alternative is available
in Norway and Denmark (in the latter country in public actions
only) also opt out -alternative is possible in mass disputes,
where individual court actions are not sensible, e.g., due to the
fact that the monetary interest of individual cases is so low
The costs of litigation
in all Nordic countries the main rule is that the losing party is
obliged to pay the legal expenses of the winner
in Finland and Sweden only the parties in the group action are
responsible for the costs
in Denmark and Norway the members may become partly
responsible of the legal expenses
the ceiling of members´ liability will be decided by the court
already in the beginning of the trial
in case the ceiling is individual and not collective, this
makes it possible for the potential members of the group to
assess, whether it is economically sensible to opt in or not
Evaluation of the Nordic group actions
1) who has afford to a group action for compensation?
The major obstacle to the use of group action for compensation in
the Nordic countries is the high costs of litigation
 so far there have been rather few cases, e.g., in Sweden only
1-2 new cases per year since 2003
Several possible ways to reduce the high costs of litigation:
a)no members liability as it is now possible in Denmark and
b)ceiling for liability to pay the legal expenses of the winner
c)no-cost rule (so called American rule)
d)conditional fee -payment (no results, no payment -system)
e)public or private funding systems (e.g. in Canada)
2) long duration of the procedure
 seems also to be one the main problems connected
to these actions
 in Sweden many of the started group actions are still
pending cases
 usual tactics for defendants: a plea of trial and
separate appeal on the procedural requirements
 central questions:
whether the defendant should have a right to make a
separate appeal in the beginning of the procedure if his plea
of trial concerning the preconditions for a group action has
been rejected in the District Court
whether there should be some kind of priority system in the
Courts of Appeal, when these kinds of actions are dealt with
3) the problem of low-value claims
 in spite of the fact that the combined monetary
interest of the mass dispute can be millions of euro,
the damages suffered by individual consumers may
be rather low
 this will often discourage consumers to register
when a group action is based on opt in –model only
one alternative would be the adoption of opt out -model at least
when it is question of low-value claims also in Sweden and
however, even opt out –model seems to be rather ineffective
when the damages caused to individual group members are,
e.g., only 100 euro or even less.
second alternative: group action for collective compensation of
damages (instead of distribution of the profit, the plaintiff e.g. a
consumer organisation would keep it in order to finance future
6.4. Cross-border Consumer Disputes
Cross-border consumer disputes:
 disputes, where a consumer and a trader are
domiciled in different countries
Typical problems in cross-border consumer disputes:
1)communicative problems
language problems, identification of the trader, etc.
2)what is the applicable law?
3)what dispute settlement bodies are available/
have jurisdiction in case the parties do not reach
a settlement in two-party negotiations
The Applicable Law in Cross-Border Consumer
The Rome I Regulation n:o 593/2008
 entered into force in December 2009
 replaced the Rome Convention on the Law
Applicable to Contractual Obligations from year 1980
except in UK and Denmark
 includes an article concerning consumer contracts
(art. 6). According to it, if the trader
a)is carrying on business activities in the country
where the consumer has his habitual residence or
b)direct such activities to that country
the contract is governed by the law of the country in
which the consumer has his habitual residence
 a trader cannot deprive the protection given by the
Regulation by using a choice-of-law clause
Jurisdiction of Courts in Cross-Border
Consumer Disputes
the starting point: court decisions are traditionally
not enforceable in other countries
The Regulation N:o 44/2001 on Jurisdiction and the
Recognition and Enforcement of Judgments in Civil
and Commercial Matters (OJ L 12, 16.1.2001)
contains a provision (art. 15) which gives protection
to consumers if:
1)it is question of credit or instalment contract
connected to the sale of goods or
2)it is question of consumer contract and the
contract has been concluded with a trader
a) who is carrying on business activities in the
Member State where the consumer is domiciled or
b) who is directing such activities to the Member
State where consumer is domiciled
In case one of these conditions are fulfilled:
1) a consumer is entitled to take legal action against a
trader in the courts of the Member State where he is
domiciled (art. 16.1.)
2) proceedings may be brought against a consumer
only in the courts of that Member State where he is
domiciled (art. 16.2.)
3) judgment given by the court of the Member State
where the consumer is domiciled may be enforced in
an other MS where the trader has his domicile or
The European Consumer Centres
Network (ECC-Net)
the starting point: in cross-border litigation the costs
are normally much higher than in purely domestic
litigation and thus form a much higher obstacle to
the use of ordinary court procedure
 ECC-Net started in the beginning of year 2005
 replaced the former European Extra-Judicial
Network (EEJ-Net) which started as a pilot program
in October 2001
The new network is based on
1)at least one European Consumer Centre in each
Member State
2)ADR- bodies in all Member States
The activities of European Consumer Centres
 1)to give legal advice to consumers who have faced
cross-border consumer problems
 2)to give assistance in the settlement of disputes by
clarifying the facts and mediating between the
disputing parties
 3)to serve as a special clearing house in unsettled
 a)to find out competent out-of-court dispute
settlement body in MS where trader has his domicile
 b)translates consumer´s complaint and sends it to
the competent dispute settlement body in other MS
the idea is that cross-border disputes will be settled
in some of the out-of-court procedures in the
Member State where the trader is domiciled
the existing ADR-bodies in MSs may be found in a
database which is updated by the Commission:

Consumer Law Especially from the viewpoint of …